What Moody’s Recent Credit Rating Decision Means for SA…

On Friday 23 March, Moody’s decided to leave SA’s international long-term credit rating unchanged. Notably, they also changed the outlook from negative to stable.

Moody’s highlighted the following areas of improvement:

• The recent change in political leadership appears to have halted the gradual erosion of the strength of SA’s key institutions;
• A number of institutions (Treasury, the SA Revenue Service, and key State Owned Enterprises) have embarked on a recovery;
• The speed with which President Ramaphosa has moved to replace the leadership in key institutions illustrates the resolve to address the problems of the recent past and to set the state, society and the economy on a new and positive path;
• The change in political leadership comes in parallel with growing signs of improvements in economic growth and a sharp recovery in business and consumer confidence;
• If confidence is sustained through further action, it offers the prospect of rising levels of investment in South Africa’s economy and enhanced medium-term growth.

Overall, the tone of Moody’s credit assessment of South Africa is very positive and can leave investors feeling more confident and optimistic about the future.

Source:  Alison Barker, ForexPeople Wealth / Kevin Lings, Chief Economist Stanlib